JAPAN - ECONOMY

Nation-wide core inflation fell to 0.3% y/y in January, but deflationary pressures are slowly receding

In January, the core consumer price index (nation-wide), excluding perishables, was down by 0.2%, and fell by 0.3% on a yearly basis, after –0.2% in December. Overall prices declined by 0.4% over the month, down 0.1% on a yearly basis, the fastest pace of decrease since May 2004. The period of deflation is now lasting for almost seven years.

As usual, “special factors” explain price developments in January. The core CPI was depressed by falling prices for phone, electricity and rice. The impact of phone and electricity rate cuts will depress core inflation throughout 2005. Since October 2004, the positive base effect due to soaring rice prices between October 2003 and September 2004 has disappeared and rice prices lowered nation-wide core CPI by more than 0.20 pp. All in all, core inflation is expected to remain below zero in Q1 2005.

In Tokyo, overall prices were steady in February, falling by 0.5% over the year, after –0.2% in January, and core CPI fell 0.5% y/y, with rice prices contributing 0.25 pp to the decline.

However, deflationary pressures are receding very slowly in all sectors except those where deregulation led to intense price competition. In particular, employee’s income growth turned positive in Q4 2004, for the first time since Q2 2003, recording a 0.4% rise. This trend is likely to continue, since the demand for labour is gradually picking up. Finally, due to bottlenecks in some sectors of the economy, higher costs will be progressively passed onto final prices.
Written: by LuisB

CINA – LABOUR AFFAIRS

It's Chinese New Year. Will workers get paid?
As travel season begins, the payment of back wages is an economic bellwether.
China is a country on the move - this month especially. The nation's trains, highways, and airplanes will handle an estimated 1.8 billion passenger trips over the next month as part of Spring Festival, a holiday of homecoming tied to the Chinese New Year.

For hundreds of thousands of Chinese migrant workers - the cogs of what has been dubbed "the world's factory" - Spring Festival is not just a rare opportunity for R&R, but a make-or-break payday. Employers often promise to pay by this holiday the back wages owed from months of toil so that workers can return to their families with the fruits of their labor from the year.

But this Spring Festival, payday probably won't come for many of these expectant workers, say labor-rights activists. And some of those who do get their money may take it to purchase a one-way ticket home, adding to a labor shortage fueled partly by poor working conditions. All this makes the Spring Festival a bellwether for those watching China's economy.

The withholding of back pay - which is illegal - has become common practice in China, where an estimated 100 million migrants from rural interior provinces flood the wealthier south and east coasts, filling the factories and construction sites with cheap labor. The Chinese government last year estimated that workers were owed around $12 billion in unpaid wages. Employers withhold pay as a means of keeping laborers in a job.

The Spring Festival travel season began last week, and the official days off this year run from Feb. 7 to 11. Already, the Chinese media is rife with accounts of workers unable to return to their families because their bosses have not and will not pay them. Other reports show the situation is improving, with more workers collecting the pay owed them so they can return home.

Stephen Frost, a researcher at the City University of Hong Kong who studies Asian labor issues, pointed as one example to publicly staged suicide threats by unpaid workers in southern China.

"That's the kind of desperation people are in," says Mr. Frost, who noted workers in the construction sector often are particularly hard-hit on back wages. "The work is tough and if you don't get your money, it's terrible."

In Shenzhen, Liu Kaiming runs a non-governmental organization called the Institute of Contemporary Observation dedicated to helping migrant workers.

"Many people cannot get their salaries," he says. "I cannot say if this year is better or worse, but the working conditions are getting better."

With the increasing profile of labor unions and strikes in China, along with government pressure to stop illegal wage withholding, the situation is likely to improve, says Liu. Many factories in southern China are also short on labor, creating pressure to improve work conditions and pay.

A report from the Chinese Ministry of Labor and Social Security last fall found that millions of migrant workers chose to stay home and subsist on little money, rather than meander through the uncertainty of pay and poor conditions at factories. The shift created what the government said was a shortage of more than 1 million workers in the Pearl River Delta.

Frost says the end of Spring Festival this year could show whether the labor shortage was an anomaly. Manufacturers and others who depend on migrant workers should know at the end of the holiday whether their work force is returning.

The country's two other major worker holidays are the "Golden Weeks" that fall May 1 and Oct. 1. Late in 2004, the central government proposed eliminating the weeks and replacing them with flexible, paid holidays. The move fell through without explanation, however, and Golden Weeks were scheduled for 2005.
Lately, however, most companies and government agencies require working weekends at both ends of each week, leaving the net sum of an extra day off.
Source: The Christian Science Monitor. February 2005
Written: by Kathleen E. McLaughlin



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JAPAN – PUBLIC HEALTH

Japan hit by human variant of mad cow
Japan on Friday confirmed its first case of the human variant of mad cow disease, a fatal brain disease thought to be contracted by eating infected beef.
The Health Ministry said that a man had died last December after contracting variant Creutzfeldt-Jakob disease.

A Health Ministry spokesman, Yuki Ueda, said ministry experts were holding an emergency meeting to attempt to determine whether the case had been caused by eating beef infected with the prions that are thought to cause the disease. He did not elaborate.
Kyodo News reported that the victim was a man who in 1990 lived for several months in Britain, where mad cow first surfaced in 1986. Scientists estimate the time between exposure and the development of symptoms to be 10 to 20 years.
The human variant of the disease has been confirmed or deemed probable in 167 people worldwide, most of them in Britain but also in France, the United States, Ireland, Italy and Canada - though hundreds of thousands of people have likely eaten contaminated beef products.
More than 140 people have died worldwide from definitive or probable variant Creutzfeldt-Jakob disease after eating meat from animals with bovine spongiform encephalopathy, as mad cow disease is formally known. The disease is thought to be transmitted among animals via feed containing brain or other nerve tissue.

About seven million animals had been slaughtered in Britain by the end of June 2004 under a plan aimed at preventing the spread of the disease.
Since it was first discovered in Japan in 2001, 15 animals have been found with the disease, but there have been no human cases.
Tokyo has checked every slaughtered cow before it entered the food supply since finding the first infected animal.
The latest suspected case was found in October.
Confirmation of the case could hinder efforts by the United States to persuade Japan to ease its ongoing ban on U.S. beef imports.
Japan banned American beef imports in December 2003 after the discovery of the first U.S. case of mad cow disease in Washington State.
At the time, Japan was the most lucrative overseas market for American beef, importing $1.7 billion worth in 2003.
Tokyo and Washington tentatively agreed late last year to a resumption of Japanese imports of American beef products from cows younger than 21 months, but the accord was stalled by differences over how to authenticate the age of cattle.
Source: The Associated Press, Reuters. February 2005



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CHINA – ECONOMY

Beijing steps up fight to ease rural poverty
China is promising farmers lower taxes and higher subsidies in its latest effort to raise rural incomes and ease burdens that have sparked violent protests.
The new policy, announced this week by state media, aims to help spread prosperity to China's countryside, most of whose 800 million people have been left behind by a boom that has turned eastern cities into economic powerhouses.
The government of President Hu Jintao, who took office in 2003, has made improving the lives of the rural poor a priority after two decades in which Beijing focused on building up export industries.
Rising tax burdens have led to violent clashes between farmers and local authorities, causing both alarm at social unrest and embarrassment for leaders of a Communist Party founded on improving the lot of mainland peasants.

The new policy, titled ``No 1 Document of 2005,'' does not give financial details but promises new spending on rural education and health programs and on irrigation and other infrastructure.

``Only by doing this can we support more population with less land, meet the growing consumption demand, open more space for agricultural adjustment of structure and boost farmers income,'' the People's Daily said Monday. ``The development of agriculture and rural villages will naturally be on a new stage if a big breakthrough is made in these areas.''
Financial details are likely to be announced by the finance minister when the national legislature holds its annual meeting next month.

While incomes in mainland cities have soared, those for farmers have risen slowly, if at all. China's annual income has passed US$1,000 (HK$7,800) per person, according to the government, but many rural families get by on a fraction of that.

The yawning gap between rural and urban incomes - and the growing social tensions that it has caused - are expected to be a key issue at the parliament session.
The policy promises higher crop subsidies and ``steadily increasing investment in agriculture'' this year, though it does not say how much or how it compares to previous government spending. It pledges to improve farmers' land-use rights - a critical issue at a time when China also faces growing rural anger at the seizure of farmland for real estate development.

Many farm families have no formal title to their land and receive little or no compensation when it is seized.
The policy promises to extend a strategy announced last year of eliminating many basic taxes. But it avoids what experts say are two key issues for raising farm incomes - the rights of rural families to own land and to move in search of work.

Farm families are not allowed to own land, controlling it instead through long-term leases that prevent them from using it as collateral for bank loans.
Rural and urban residents also are classified separately by the government. Millions of people move to cities every year looking for work, but many areas periodically detain and send home those who lack residency papers.

A 2003 World Bank report said the single most effective step the mainland could take to raise farm incomes would be to let farmers move to cities in search of better-paid work.
Allowing such migration would raise rural incomes by as much as 16percent by letting the farmers who remain behind acquire more farmland and compete more efficiently, the report said.
Source: AP. February 2005
Written: by Joe McDonald



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NEPAL – DEMOCRACY AFFAIRS

Crisis in Nepal
If electoral democracy was suspended in Nepal in 2002, the sacking of Prime Minister Deuba and the assumption of total autocratic powers by the King now have totally buried any semblance of constitutional governance in Nepal.

Constitutional governance takes years to build but may collapse in a day. Following the end of the rule of the Ranas in 1951, governance in Nepal was conducted through a number of interim advisory governments. No sooner was the multi-party Constitution adopted in 1959, it failed. B.P. Koirala led the Nepali Congress Party to an electoral victory. But by 1960, King Mahendra suspended Parliament and took control. On the basis that Nepal was not quite ready for a parliamentary democracy in which political parties competed for power; a new panchayat-based Constitution was created in 1962. Amid years of indifferent governance, political agitation led to a constitutional referendum in 1980. As a result, the King agreed to direct elections but without political parties.

Increasing discontent led to Nepal's new Constitution of 1990, which created a parliamentary democracy with a Bill of Rights and an independent judiciary. In 1991, G.P. Koirala led the Nepali Congress Party to victory and became Prime Minister. But in 1994, he was defeated in a no-confidence motion. He lost the elections and a communist Government was ushered in. It also fell soon. The period 1997-2001 saw many governments - the result of party splits and infirm coalitions. Over the 1990s, the Maoist rebellion intensified. Talks for a truce failed in 2001 when a state of Emergency was declared, which is remembered for its flourishes of state lawlessness.

Amidst all this confusion, on June 1, 2001, King Birendra and his family were killed by Crown Prince Dipendra, who also died after inflicting gun shot wounds on himself. King Gyanendra ascended the throne. As violence increased, Prime Minister G.P. Koirala resigned. Even though the Assembly was dissolved in 2002, no elections were called. Veritable musical chairs followed of successive Prime Ministers with Sher Bahadur Deuba, who was Prime Minister between 2002 and 2003, being reappointed in June 2004. Meanwhile, the rebels blockaded Kathmandu. Finally, on February 1, 2005, King Gyanendra sacked Prime Minister Deuba and declared an Emergency to assume all powers of governance for three years.

From 1951, Nepal's experiments with constitutional democracy have been disfavoured by history. The present crisis is riddled with a constitutional impasse. Normally, a Prime Minister who is willing to act as one cannot be dismissed unless he has lost his majority. The question of Prime Minister Deuba losing his majority did not arise as there have been no elections since 2002. King Gyanendra has relentlessly sacked Prime Ministers since he was enthroned in 2001 - trying his hand with various alternatives including royalist supporters. If the sacking of Mr. Deuba was unconstitutional, the legality of the King's assumption of Emergency powers is even more doubtful. Under Nepal's Constitution, an Emergency can be imposed if a "grave crisis" such as war, external aggression, armed rebellion or extreme economic disarray threatens the sovereignty and integrity of the country. Nepal is in a state of crisis. In the absence of elections, there being no Parliament, the question of the House of Representatives approving of the Emergency by a two-thirds vote does not arise. Constitutionally, an Emergency beyond a period of one year is not envisaged. An arbitrary declaration of Emergency for three years goes beyond the pale of constitutional governance. If electoral democracy was suspended in Nepal in 2002 (from when elections have not been held), the sacking of Prime Minister Deuba and the assumption of total autocratic powers by the King in 2005 have totally buried any semblance of constitutional governance in Nepal for a long time to come.

Constitutional lawyers have problems dealing with situations of this nature. The sacking of Prime Ministers is not unknown even under constitutional governance. In 1963, the Privy Council in appeal found the sacking of the Nigerian Prime Minister invalid. But Malaysian courts found the removal of a provincial Premier in 1966 valid. In India, Governor Dharam Vira's dismissal of Chief Minister Ajoy Mukherjee in West Bengal in 1967 was not interfered with by courts. Mulayam Singh's complaint that Governor Motilal Vohra had sacked him unfairly in June 1995 was sent to a Supreme Court constitution bench where the issue died an obsolescent death. But in all these cases, a justification for the dismissal was a refusal to test that government's majority.

But ingenuity has never failed lawyers and judges in such situations. In a sense, a new justificatory trend emerged in Pakistan in 1958 when President Ayub Khan scrapped the Constitution of 1956 to assume total powers. In Dosso's case (1958), the Pakistan Supreme Court used jurist Hans Kelsen's theory that a revolution can be justified when the basic norm underlying a Constitution disappears and a new system is put in its place. Dosso's case became the new basis for a new jurisprudence for usurpers. As a result, every usurper or dictator who destroyed an old Constitution could claim the right of constitutional governance under a new basic norm of his own creation. But in such situations what was the new basic norm? In Asma Jilani's case (1969), Pakistan courts took the view that the doctrine of necessity could be the constitutional basis for a new usurper regime. As Pakistan went through usurper after usurper, this usurper jurisprudence was consolidated — no less in Begum Bhutto's case in 1977. This consolidation became even more startling when President Pervez Musharraf assumed power in 1999 and administered a new oath to his judges preventing them from challenging his usurpation.

Pakistan's `usurper jurisprudence' was not alone in pursuing this kind of constitutional subversion. Judges from Ghana followed this approach in Sallah's case in 1966 and those from Nigeria in Laknami's case in 1969. Such an issue reached English courts in the aftermath of Ian Smith declaring independence in Rhodesia (now Zimbabwe). But in Madzimbamuto's case (1969), British judges refused to follow the change-in-basic-norm theory and declared Mr. Smith's regime unconstitutional — although one dissenting judge seemed to give some legal basis to the Smith regime under the doctrine of necessity. But while it was possible for British judges in Britain to take this stance from far away London, it requires courage for local judges located in the crisis country to challenge this kind of unconstitutionality in the face of a military or dictatorial takeover.

As far as Nepal is concerned, it remains to be seen what Nepalese courts will do if asked to deliberate on the actions of King Gyanendra. In the past, the lawyers of Nepal have been courageous in taking constitutional issues to court. Nepal's judges could declare King Gyanendra's takeover unconstitutional. This would mean restoring Prime Ministership to Mr. Deuba who will in any case not be responsible to any Parliament. It would, of course, be easier for them to invoke Kelsen's theory of a change in the basic norm to legitimise King Gyanendra's usurpation of dictatorial power. In this, it would find support from the doctrine of necessity invoked by Pakistan's courts to justify virtually all or any kind of unconstitutional violation. A doctrine to justify revolution has been trivialised to help dictators. The rule of law is ill-served by such constitutional acrobatics.

But where does Nepal go from here? The actual situation in Nepal is serious and drifting out of control. When King Gyanendra used the Emergency powers in November 2001, the situation worsened in ways that forfeited the confidence of the people. Quite apart from the constitutional violations, the present situation was hardly the time to compound a military crisis into a constitutional disaster. It is in the overall interests of Nepal that the King recalls his orders sacking Mr. Deuba. Declaring a three-year Emergency is neither necessary nor prudent. On February 2, 2005, he swore in a Cabinet of loyalists. What is needed is to create consensus national governance, which will take Nepal into a democratic framework. When Mr. Deuba asked President George W. Bush for support to fight the Maoist rebels in 2002, America pledged $20 million to this cause. It remains a moot question as to what the Government of Nepal expects from America now — and, even more so, what America led by President Bush will threaten to do. This is the time for the King of Nepal to return to first principles of democratic governance and not invite further chaos in an already troubled nation. Constitutions require an inner morality to make them function.
Written: by LuisB. February 2005



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MIDDLE EAST – POLITICAL AFFAIRS



Attacking Iran 'not on US agenda'
Condoleezza Rice has insisted that attacking Iran is not on the US agenda "at this point in time".
She was speaking in London following meetings with Tony Blair and Jack Straw, on her first overseas trip as US secretary of state.
She said the US would use diplomacy to deal with Iran's nuclear programme.
But she attacked its human rights record and claimed it was harming prospects for peace in the Middle East by supporting terrorism.

Diplomatic tools
Ms Rice described the half hour meeting with Mr Straw and Mr Blair as "productive" and hailed the strength of the US/UK friendship, saying America had "no better friend and no better ally".
Asked if she envisaged circumstances in which the US would attack Iran, she said: "The question is simply not on the agenda at this point in time."
She added: "We have many diplomatic tools still at our disposal and we intend to pursue them fully."
But she said the Iranian people "deserved better", and condemned the regime's "abysmal human rights record".

'Supporter' of terrorism
She told BBC's Breakfast with Frost that America's primary goal is "to deal with Iran's destabilising influence" on the international scene which is "one of the most important barriers" to the Israel-Palestinian peace process.
Iran is "the key supporter" of rejectionist groups like Hezbollah, she said.
"We need unity of purpose, and unity of message to Iran to stop those activities."
Attention has been focused on Iran's civilian nuclear programme amid fears that the Tehran regime is trying to build a nuclear bomb.
Mr Straw hailed efforts by the UK, Germany and France to secure a diplomatic resolution to the crisis, insisting that Washington had been "very supportive of the process".

Healing divisions
He later told BBC's the World At One: "As Condoleezza Rice and indeed President Bush have said, they are backing the diplomacy which is being led by France, Germany and the UK."
As a result of agreements reached, all of Iran's uranium enrichment and related activities, apart from some "very limited compliance", have been suspended, he said.

On Iraq, Mr Straw highlighted the success of the country's recent elections as helping heal world divisions over the war.

Ms Rice's week-long tour of Europe and the Middle East includes talks with the Israeli and Palestinian leaders.

She also confirmed her attendance at a Palestinian conference in London next month.

During the rest of the trip, Ms Rice is expected to give a staunch defence of President George Bush's stated aim of spreading freedom and democracy around the world in what is seen as a bid to mend relations with nationals opposed to the Iraq war.
After leaving London, she flew to Germany for talks with Chancellor Gerhard Schroeder.
Her whistle-stop tour is also scheduled to include stops in Belgium, Luxembourg, Turkey, Italy and Poland.
Ms Rice will round off the trip by making a major speech on US-EU relations in Paris.
Source: BBC News. February 2005



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CHINA – ECONOMY

Profits stall at China's Lenovo
Profits at Chinese computer firm Lenovo have stood still amid slowing demand at home and stiffening competition.
The firm is in the international spotlight after last year signing a deal to buy the PC division of personal computer pioneer IBM.
Lenovo's profit for the three months to December was HK$327m (US$42m; £22m), less than 1% up on the year before.
Chinese PC sales have risen by a fifth in each of the past two years, but are now growing more slowly.
The company is still by far the biggest player in China, with more than a quarter of the market.
But Western firms such as Dell and Hewlett-Packard are also mounting a more solid fight for market share in China, and Lenovo's sales were down 3.7% by revenue to HK$6.31bn.

End of an era?
If the $1.75bn agreement Lenovo signed with IBM on 8 December goes through, it will mark the end of an era. IBM pioneered the desktop PC market in the early 1980s, although strategic mis-steps helped lose it its early dominance. In any case, margins in PC market are now wafer thin, and profits have been hard to come by for most vendors except direct-sales giant Dell.
But investors have been less than impressed with Lenovo's move, designed to take it out of China and further onto the world stage.
Its shares are down 20% since the announcement two months ago, largely because of the unprofitability of the unit it is buying.
There have been rumours that the deal could be in trouble because US government agencies fear it could offer China opportunities for industrial espionage.
The reports of the possibility of an investigation into the risk sent Lenovo's shares up 6% in late January.
Source: BBC News. February 2005



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JAPAN - ECONOMY

Toyota sees 1 trillion yen year as profit rises 3.5%
Toyota Motor Corp. said Thursday its group net profit in the October-December period rose 3.5 percent from a year earlier to 296.5 billion yen, clearing the way for its profit for the year to March to exceed 1 trillion yen for a second consecutive year.
The nation's largest automaker's brisk performance was backed by lower costs and higher global sales.
Toyota raised its global sales projection for fiscal 2004 to 7.29 million, up 70,000 units from November, mainly due to higher success in North America and Japan. But the automaker is doing well everywhere.
"The number of vehicles we sold increased in every region" from a year earlier, Senior Managing Director Takeshi Suzuki told reporters in Tokyo.
Sales in the quarter rose 5.9 percent to 4.64 trillion yen, and operating profit climbed 5.3 percent to 422.9 billion yen.
Toyota cut costs by 40 billion yen, mainly from parts procurement, which more than offset the negative impact of the yen's appreciation against the dollar, which pushed down operating profit by 10 billion yen.
The positive factors also absorbed a 39 billion yen increase in expenses for research and development and expanded overseas production bases.
For the full year, the company expects to cut only 170 billion yen in costs, compared with the 200 billion yen it initially projected. Suzuki blamed the shortfall on rising materials costs, including steel, but said the impact fell within range of the company's expectations.
In terms of volume, Toyota's global sales in the quarter, including sales by mini vehicle subsidiary Daihatsu Motor Co. and truck maker Hino Motors Ltd., totalled 1.84 million vehicles, up 8.2 percent from the previous year.
Domestic sales grew 3.5 percent to 573,000 vehicles, led by the success of the new models, including the Isis minivan and the Mark X luxury sedan.
In North America, the automaker sold 576,000 cars, up 2.6 percent, thanks to the high popularity of the Sion series with younger drivers and Lexus luxury cars.
In calendar 2004, Toyota sold 2.06 million cars in the United States alone, achieving its target of 2 million.
In Europe, the automaker sold 249,000 cars in the quarter, up 14.3 percent, on strong demand for the Corolla compact series. European sales in 2004 came to 916,000 units, marking eight consecutive years of gains.
In fiscal 2003, Toyota posted a net profit of 1.16 trillion yen, becoming the first Japanese firm to top the 1 trillion yen mark.
Source: Daily Shinbum
Written: by LuisB. February 2005



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TAIWAN – NATIONAL AFFAIRS

How can Taiwanese trust Beijing?
Recent events indicate how much the people of Taiwan long for an improved cross-strait relationship against a backdrop of prolonged military threats from China and international isolation. The slightest gesture of warmth or lessening of hostility on the part of Beijing is enough to incite wishful thinking among some people in Taiwan, which makes these people highly susceptible to Chinese unification propaganda.

The first recent event that gave false hope to people in Taiwan is the fact that the governments on the two sides of the Taiwan Strait have finally reached an agreement to make possible non-stop charter flights for the Lunar New Year holiday period. Although Beijing has repeatedly made it clear that this year's charter flights are an isolated incident, many still wholeheartedly believe that it was the beginning of a new-found friendship between the two sides of the Taiwan Strait. They turned a blind eye to the fact that Taiwan had actually taken grave national security risks to make the flights possible. It is truly worrisome that some groups within Taiwan will use this as a stepping stone to push for permanent cross-strait links, without thinking twice about what kind of price the people of Taiwan would have to pay.

The second event that brought hope to the naive is the arrival on Tuesday of a delegation from China to pay their respects to the late top negotiator Koo Chen-fu, former chairman of the Straits Exchange Foundation. Sun Yafu, vice chairman of China's Association for Relations Across the Taiwan Strait (ARATS) and director of its Taiwan Affairs Office, and Li Yafei, secretary-general of ARATS, came in their unofficial capacities as personal envoys of Koo's Chinese counterpart, ARATS chairman Wang Daohan.

During their brief stay, they refrained from making any official statements on the future of cross-strait relations and avoided meeting government officials, except for a brief meeting and handshake with SEF Chairman and Mainland Affairs Council (MAC) Vice Chairman Johnnason Liu and SEF Secretary-General Jan Jyh-horng around the end of the memorial service on Wednesday. In fact, they deliberately arrived close to the end of the service to avoid meeting President Chen Shui-bian, who attended earlier.

Despite this window-dressing gesture of good will, Beijing has not slowed its pace even slightly in getting its anti-secession law enacted. In fact, the Chinese National People's Congress will finish enactment of this law by the end of March. The intended target of the law is obviously none other than Taiwan. Few can overlook the fact that the anti-secession law will give Beijing a legal basis to move against Taiwan in the event of any action Beijing interprets as an act of "Taiwan independence." The hostility and implications of the anti-secession law is so strong and unsettling that the US has openly voiced concerns on more than one occasion.

This could explain why Beijing agreed to the Lunar New Year charter flights and dispatched Sun and Li to Taiwan. However, the tokenism of these two small gestures amounts to virtually nothing in the face of the enormous hostility behind the anti-secession law. This is not to mention the fact that, throughout the process, Beijing did not forget to continue increasing the number of missiles targeting Taiwan. The president recently announced that the number of missiles had grown to 706. Under the circumstances, one cannot help but wonder how anyone in Taiwan can believe that Beijing is sincere about improving its relationship with Taiwan.
Source: The Taipei Times. February 2005

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